Despite the Covid pandemic and fewer mega-size deals, the initial public offering (IPO) market in Hong Kong in 2020 still outperformed most of its competitors. While the number of new IPO listings on the Hong Kong Stock Exchange fell from 164 in 2019 to 154, the total amount of funds raised in 2020 soared by 26.5% to USD51.28 billion, the exchange’s highest figure since 2011.
This performance put the Hong Kong Exchanges and Clearing Limited (HKEX) in second place on the global IPO fund-raising list in 2020, behind only the NASDAQ with USD57.3 billion raised while the Shanghai stock exchange was in third place with USD49.42 billion raised.
This demonstrates the investors’ vote of confidence in Hong Kong as the leading financial hub in Asia and as an international capital-raising platform supported by a well-developed ecosystem of banking, financial and legal services.
Hong Kong’s strong performance in 2020 has been attributed to the launch of the Hang Seng Tech Index, the use of weighted voting rights (WVR) in giant tech companies and changes in market sentiment towards the US, which has driven more Chinese companies to seek a listing on the HKEX.
Nine US-listed Chinese companies chose the Hong Kong Stock Exchange for a secondary listing in 2020, raising a total of HK$131.3 billion or 34% of the total funds raised. Among the newcomers, JD.com, JD Health International and NetEase were the three largest listings, raising HKD34.56 billion, HKD31 billion and HKD24.26 billion respectively.
Hong Kong was also the second-largest biotech IPO market in the world, and the largest in Asia, with 22 healthcare and life sciences companies listing on the HKEX, raising a total of HKD98.8 billion. Out of these companies, 14 pre-revenue biotech companies were listed under Chapter 18A of the Main Board listing rules, raising an aggregate of approximately HKD41.1 billion.
It is anticipated that the global market conditions will continue to be challenging and volatile in 2021 but, given the continued deterioration in China-US economic relations, the Hong Kong IPO market is still expected to perform strongly. Hong Kong is forecast to have about 120-130 IPOs in 2021 raising more than HKD400 billion. The shift from the traditional real estate, financial services and construction businesses towards technology, e-commerce and biotech businesses is also expected to continue.
“HKEX had a very good year,” said Charles Li Xiaojia, former HKEX Chief Executive. “I have every confidence that HKEX will continue to play a vital role connecting investors, corporates and markets around the world.”